Obamacare Has Arrived. How Should We Feel?

In case you have been living under a rock, Obamacare (aka the Affordable Care Act) launched two days ago. This ground-breaking alteration to American medical care has been subject to both lavish praise and severe criticism.

What Obama Says

“Tens of thousands of Americans die each year just because they don’t have health insurance,” the President said. “Millions more live with the fear that they’ll go broke if they get sick. And today, we begin to free millions of our fellow Americans from that fear.”

Let us ponder this for one moment. By now you should be aware that the lack of access to adequate health care in the United States has caused thousands upon thousands of unnecessary and untimely deaths. If you aren’t, read HERE, here, and HeRe. I have already highlighted that, as a country, we are not required to care if those with fewer resources have medical care, and I respect the opinions of those who hold fast to the correlating “survival of the fittest” and pure capitalism/individualism ideals (which tend to go hand-in-hand). However, from a humanitarian standpoint, I personally believe that contributing a little bit of money for the larger, overall good is not an inherently flawed idea. At least not at the outset.

Obama’s Heart is in the Right Place

Most of us don’t mind paying a little tax so we can live in a safer and healthier society. We already pay taxes for the police force and fire department, to improve our safety. I’ve never heard anyone advocating the demolition of the fire department or the closing of the police station – or worse, opening the doors to all the prisons (actually I have heard the last one, during my work defending those accused of federal crimes). People don’t have the desire, or the money, to hire their own security and do their own fire-fighting. Most of us can see the incredible value these institutions add to our lives, and at a comparatively low cost.

Therefore, a small additional tax for wider access to quality health care should not bother too many people. Right? Wrong. Our government, the media, and the powerful insurance industry has turned this idea into a political circus, complete with magic tricks, fortune tellers, and strange terrifying beasts from another world.

The Scary Factors

Cost

What people are mostly concerned about, and rightfully so, is how much this will cost us. As the Supreme Court reasoned, Obamacare is actually a TAX designed to create a health care system more regulated by the federal government. But how much will this “tax” actually cost us? Will we pay more than what we already paid for our insurance? The answer to this is not easy. Most insurance experts and economists believe that it will be the young and healthy who foot the bill for greater access to medical coverage. The young and healthy will pay far more in premiums than what they actually receive in medical care, to make up for the older and more ill people who will pay less than the value of the medical care they require. This is based on typical insurance principles, and isn’t a surprise to anyone.

But what about the option we all have to not buy insurance on the exchange at all – but instead pay a relatively modest penalty? We may find the young/healthy opting for this cheaper fee, instead. If that occurs in large numbers (which I personally believe it will), it will seriously impair the exchange. The government will end up needing to address this, either by increasing the year-end penalty (taxing them more, to make up for lost monies and attempt to push them into purchasing from the market) or by providing larger subsidies for the young/healthy (which would be like reducing their “tax” burden and spreading that burden to the rest of the American populace). It will be interesting to see what happens.

Quality

The other scary factor is what Obamacare might do to the quality of our medical care. There are many frightening rumors about how our system will become like the western European “socialized” medicine, and suddenly our access to quality care will be decreased. While it is true that western Europeans have longer waits before they are able to see medical specialists (at least in some countries, where I have personally witnessed this myself), I don’t think this is something Americans should panic about. First, let’s see how many “more” people (supposedly armed with new “Obamacare insurance”) are making medical appointments. I don’t believe there will be a sudden surge of “new” medical patients. Second, this is the United States, people. If you think there will not be new and creative options to get around long waits for medical appointments, you aren’t a true believer in American entrepreneurism.

Wait and See

In sum, Obamacare sure isn’t perfect, but let’s wait and see what happens. The previous system wasn’t efficient, either. If you’d like to read a really great analysis of what a more economically ideal system would look like, read University of Chicago economist John Cochrane’s take: After ACA: Freeing the Market for Health Care

2 comments

[…] most uninsured Americans are aware that the failure to purchase Obamacare will cost you a fee (or as the Supreme Court calls it, a tax), most of us don’t know how that fee is calculated – or when the fee will need to be […]

[…] people drop out because it’s a bad deal, and then premiums rise more, and so on”. There have been concerns about young, healthy people failing to enroll in Obamacare, thus undercutting the effectiveness of Obamacare when the premium pool becomes too small to […]

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